ABC - Activity Based Costing and Activity Based Managment - The Same Thing in a Different Guise.pdf

P
s. s. Activity Based Costing and Activity Based Management
' ACTIVITY BASED COSTING AND ACTIVITY BASED MANAGEMENT
The Same Thing in a Different Guise?
By Yoram Eden and Boaz Ronen
~ntroduction the Teva pharmaceutical firm in Israel that
led to a dramatic diminishing of the
Managerial accounting has undergone a disputes between the managers of the
veritable renaissance since the mid-1980s, marketing and the production departments
particularly thanks to the pioneering work of once they recognized and accepted the
Professor Robert Kaplan and his colleagues logic of working on the basis of ABC
Saplan, 1984). The high point of this process transfer prices.
of innovation was the presentation by Kaplan
and Cooper of the Activity Based Costing 3. ABC reveals the cost plexity
method (hereafter, ABC) in the late 1980s. arising from the range of products and
variations in the structure position
The ABC method won immediate acclaim in of operating costs. In anizations
industrial as well as anizations, and the indirect costs constitute the major part
the professional literature followed with
of the operating costs and ABC is
dozens of reports of its essfi~l
designed to address not only the better
implementation. The many books that allocation of these costs but also, and
appeared described the method and its more importantly, to lead to a better
underlying principles, as well as the benefit of
understanding of the factors creating them
applying it in various sectors of the economy. (the cost drivers). In this sense ABC
Notable among the more recent publications appears to be a necessary condition for
are Judith Baker's 1998 book describing the
effective management.
implementation of the method in the
healthcare system, and Raili M. Pollanen's 4. Furthermore, traditional costing does not
1996 book on Activity Based Management address the problem of non-production
(ABM). In the cours